The Decline of Union Density in New Zealand: A Comprehensive Analysis

This report examines the significant decline in union density in New Zealand from 1991 to 2008, highlighting the impact of the Employment Contracts Act (ECA) of 1991 and the Employment Relations Act (ERA) of 2000. It explores how these legislative changes influenced union membership and collective bargaining. The report analyzes the stagnation of union density rates after the introduction of the ERA, despite its union-friendly intent, and discusses the factors that contributed to the decline in private sector union membership and collective bargaining, including employer attitudes and the changing nature of the labor market. The analysis covers the shift from industrial arrangements and collective bargaining to individualized employment relations, and the role of various factors such as legislative changes, employer resistance, and employee disinterest in the decline of collectivism. The report concludes that the decline in New Zealand union membership is ongoing, with workers increasingly relying on government and other bodies for benefits formerly provided by unions, leading to a potential decline in their relevance.

Running head: UNION DENSITY
Union Density
Name of the Student:
Name of the University:
Author note:

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Introduction
Employee representation is always regarded as the most central concept in the context
of industrial relations and trade unions are considered to be the superior form of the employee
representation. Between the years 1991 to 2008, the world has experienced huge changes and
so does the union density. This paper will elaborate on this context. It shall shed light on what
has happened to the union density rates during this period in New Zealand. Furthermore, it
shall focus on the possible reasons behind the stagnancy of the density rates after the
introduction of the ERA in 2000, notwithstanding that the act has supported for trade unions
and specific objective of promoting collective bargaining. Finally, the outcomes that are
associated with the decline in collectivism shall be discussed below. It shall end its discussion
describing the factors that underlay the decline in private sector union membership and
collective bargaining, along with a conclusion to sum up the whole.

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Decline in the rate of union density in New Zealand: New Zealand, actually, is a very
powerful example of the significance of legislation to the growth of union and now is also the
same for the union decline (Schnabel, 2013). The decline in the union membership is
significant as because they have the potential to affect the employment, investment,
productivity, distribution of the earnings and the overall outputs, for the good or the ill. It is
to be noted that declination in the membership of union was not just started within a day. A
major slowdown in the global economic growth as well as productivity, along with increased
inflation after the oil shocks of 1970s had created an adverse labor market conditions
virtually in all the Western countries (Khan, 2014). The two legislation pieces that have
almost directly influenced the levels of union membership are the Employment Contracts Act
(1991) and the Labor Relations Act (1987). However, it has fallen markedly in the early
1990s. By the May of 1991, there were about 69.1% of fewer unions than that was in the
December of 1985 and this was due to the Labor Relation Act that required the unions to
consist of minimum 1000 members, where in the previous legislation it was only 30members.
The sudden fall in the union membership or union density at the initial two and a half years
after the Employment Contracts Act of 1991 had been passed was vigorous in both the
private and the non-profit sectors. It was intense among the workers belonging from the
secondary labor market. New Zealand has led the way in liberating and releasing the wage
bargaining and economy with the introduction the ECA and the reduction in government
power on wage bargaining. From the year 1991 to 1994, the union densities in New Zealand
fall from 40.8% to 24.1% (Maloney & Savage, 2016).

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(Union density rates of Australia, New Zealand, UK and USA from 1960 to 2012)
Among the all other countries, it is New Zealand that has undergone a great fall in its
union density rate (Wilson et al., 2013). The composition of employment has shifted to the
traditionally non-union workers and sectors from the highly unionized ones. Share of the
employment in the manufacturing process had dropped down largely throughout the country,
whereas the same in the white-collar works was increased, which in turn was producing a
labor forces for whom most of the traditional issues in union were very irrelevant.
Furthermore, the labor market during this period became greatly internationalized because the
trade was liberalized as well as the capital market adapted a more international structure.
Since the year 1990, the New Zealand’s economy was turned into more decentralized- the
unemployment benefits were completely cut off and the welfare eligibility criteria were made
strong and tightened (Morgan, 2013). Furthermore, the Employment Relation legislation
(ERA) was passed in order to restructure the relation of the industrial system through
eliminating compulsory unionism and national awards.
Factors that made the density rates remain stagnant after the introduction of ERA in
2000: The ERA or the Employment Relations Act of 2000 was regarded as union-friendly
and in between the years between 1991 and 2000, membership in unions had increased by
26.5%, but it is to be noted that the level of union density never ever has recovered to its pre-
1991 level. In fact, it has declined from the year 2010 and it has faded in the key industries as

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the employment has gradually grown following the decline of the global financial crisis. The
ERA had altered the legislative philosophy which has entirely dominated the 1990s, by
providing encouragement to the union membership as well as by encouraging collective
bargaining as a positive basis for the employment relationships. There has been also a notable
downfall in the coverage of collective bargaining along with numerous density rates and
collective agreements dropping away since ERA was introduced. The main reason for this is
that under the ECA, large numbers of collective contracts were arranged by informal
groupings of the workers who did not define themselves as a part of unions. According to the
requirement of ERA, only the registered unions could participate in collective bargaining and
this has led to formalize their status as a registered union in order to allow them to
continuously negotiate their employment terms and conditions. The major factor that has
contributed to the stagnation of the union membership is the attitudes of the employers. The
other factors include the inability of the unions in gaining ground on the multi-employer
collective agreements, their lack of support and interest and the existence of representation
gap. Under the ERA (2000), it was expected that the unions will try to promote industry level
or multi employer level collective agreements (Colvin & Darbishire, 2013). However, the
things went otherwise. The unions have continuously complained that the things were very
difficult for them to establish these agreements as they lack the required power and muscle to
do so. Furthermore, they also argued that the prescribed bargaining process was cumbersome
and hence, they were unwilling to enter into the multi employer agreements.
Factors that underlay the decline in the private sector union membership and
collective bargaining: New Zealand has a very colorful and blissful history of industrial
relations that are ventured through a wide array of industrial relations system over the last
fifty years. There rate of union density in the private sector undergone to the level of 10%
(the lowest of all times), after the introduction of ERA (Pursued, 2014). Each of them has

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provided a character and has given a shape to the collective bargaining in this particular
country. There has been an underlying shift away from industrial arrangements and collective
bargaining to the individualized and workplace focusing on employment relations in the New
Zealand in the past two decades.
Private Sector Density
Year Coverage (000s) Private Sector (in %)
1990
1995
2000
2004
413.6
247.0
244.8
123.7
48
21
21
10
Table: 1 Density rates and coverage of collective agreements 1990-2004
Source: (May, Walsh & Kiely, 2014)
Before the introduction of ECA, the bargaining density in the private sector was under
50% (McAndrew, Edgar & Geare, 2013). In the early 1990s, the density fell away but was
stabilized to about 21% towards the end of the 1990s. With the same, the number of the
collective contracts was reached to 2947 in the year 1999. The main areas where the unions
in New Zealand have experienced major losses are in the secondary labor markets in the
private sector union membership, where the established unions have battled in order to stay
pertinent (Rasmussen, Foster & Coetzee, 2013). According to the recently conducted
research, there have been large arrays of explanatory factors, explaining the reduction or
decrease in collectivism in New Zealand. Some of such factors include legislative changes,
the representation gap due to insufficient union reach, employer resistance, collective
agreements of multiple employers, and inability of the unions to secure or safeguard the
industries, lack of support, employee unconcern or their lack of interest in context to
collective arrangements. Along with these, this is also to be noted that during those period,
the number of people employed in the private sector was rapidly increasing, as the emergence
of new industries was taking place. This was also contributing to a substantial decline of the
unions in the public sector. One of the major factors that have been contributed and are still

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contributing in the declination of union membership in the private sector is that union are
often considered as irrelevant. In their good times, workers do not need the help of the unions
for securing an increase in their benefits and wages as everyone profits from the economic
prosperity (Harcourt, Lam & Wood, 2014). With the same, in bad times, they think that
unions cannot protect their members form the layoffs, tougher working condition, benefit and
wage reductions. People in fact, always perceive that union contract will make things and
situations worse. Furthermore, union has a very poor public image. People consider union as
inefficient and bloated. The stories about mob influence, labor racketeering, bribery etc are
few of the most common fares of current days. Apparently, one of the major causes is that
most of the people in New Zealand slowly started turning to government at the end of the 20th
century. They no more were turning to unions for their basic protections (Castles, De Haas &
Miller, 2013). They started relying on the government for their pension problems,
discrimination issues, healthcare and the other related benefits, which were primarily and
formerly provided by the unions alone.
Conclusion
From the above discussion it can be concluded that the union density rates in New
Zealand has undergone a drastic fall since the year 1991. It is one of the major issues that the
country’s trade union is facing today. The reasons behind the same have been discussed in the
paper in brief. It is to be conclude that decline in the New Zealand union membership is still
continuing, despite the efforts of the government to stop the slide. One of the main functions
of the unions were to help the workers maximize their salaries and wages but workers now
seek the help of government and various other local bodies for the same, leading to the loss in
necessity of the unions. Hence, until and unless the labor movement reverses its long-
standing downfall or decline, the unions run the danger of their density and membership
diminishing into irrelevance.

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